The most overlooked statistic in economics is poised for an epic comeback: Household formation

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Published: Wednesday, Dec. 26 2012 11:24 a.m. MST

Alejandro Ramirez, left, and Benjamin Hinojosa work on the construction of a home at Daybreak, Thursday, Dec. 20, 2012.
(Ravell Call, Deseret News)

Our take: For the last few years, home and car sales have been at a decrease. The Atlantic's Derek Thompson comments on current graphs on the housing market and how things might be changing in 2013. "With home prices rising, construction hours-worked recovering, and multi-family homes making a sustained comeback, 2013 could be the year our economy breaks out of "new normal" growth and gets back to "normal normal" growth."

The most important graph of 2012? We asked around for some suggestions last week. We got 34 responses. This was mine. It answers the question: What share of each recovery since 1970 came from selling houses and cars?

The message is that home and car sales power recoveries. This recovery is different from all others because we just. Aren't. Selling. Enough. Houses.

That might be changing. With home prices rising, construction hours-worked recovering, and multi-family homes making a sustained comeback, 2013 could be the year our economy breaks out of "new normal" growth and gets back to "normal normal" growth.

Behind my optimism is a trend that doesn't get a lot of play in some corners of the financial press. It's household formation. Household means is a group of people living together. It can be six roommates, a four-person nuclear family plus a grandmother in the guest room, or a a young couple of two. Formation means one more of those categories. More formations is good news. It suggests more people getting jobs, getting apartments, getting married, having kids, and (in all likelihood) spending more money to furnish their new households and express their independence.